Investment Thesis - Gold

For a long time, gold has been considered a representation of wealth and throughout history people have held on to Gold as a store of value. The first coins containing gold appeared around 800 B.C., which can be an indicator of how valuable the history of this precious metal is. 

During periods when market volatility is high, investors have often turned to Gold, as it tends to be considered a “safe haven” asset in times of uncertainty for a number of reasons. Unlike state-issued currencies, Gold has historically held its value. People see Gold as a way to transfer wealth through generations, and they value the unique properties of this precious metal. Its worth is determined primarily by supply and demand, which tends to give it a high level of volatility and risk. Like other commodity-related products, gold is not suitable for all investors.

Moreover, many consider Gold a hedge against inflation or market downturns because of its reputation as a store of value. Demand for Gold tends to increase when there is a “flight to quality” as a result of poor market conditions.

Throughout the COVID-19 pandemic, Gold has become a trending investment option across the globe. If the points listed above sound appealing to you, read on to learn more about investing in Gold. Keep in mind, investing involves risk. Examples are for illustrative purposes and are not recommendations of Passfolio Securities LLC. Past performance is no guarantee of future results.  

Graphic comparing Gold share ETfs with dow jones industrial average
Graphic comparing Gold share ETfs with dow jones industrial average
Graphic comparing Gold share ETfs with dow jones industrial average

Gold Prices Throughout the Century

When comparing Gold to traditional stocks, over the past 30 years the commodity has been outperformed by indexes like The Dow Jones Industrial Average (DJIA), which has surged roughly 1088% in comparison to Gold’s 375% increase.

Over the last 15 years, however, the price of gold has risen about 235% and the DJIA has increased just 185%. In the long term, on average, gold has been outperformed by traditional stocks, but over certain shorter investment horizons, it can be an alternative that may come out ahead.

Keep in mind that gold prices fluctuate. It is wrong to invest in Gold thinking that its value will never go down or that past performance guarantees future results. 

1 -, Time period: 1/2/1991 - 1/12/2021

2 -, Time period:1/2/1991 - 1/12/2021 

3 -, Time period: 1/19/2006 - 1/12/2021

4 -, Time period: 1/19/2006 - 1/12/2021

How to Invest in Gold

The most traditional way of investing in Gold is by owning physical assets, like gold bars, coins, or jewelry. One advantage of this method is that physical gold is one of the most liquid forms of the commodity. However, managing physical assets can be hard and may include hassles like having to store them and keep them safe.

You can also buy Exchange Traded Funds (ETFs) that allow you to track the price of the commodity without having to physically own it.  If you do try your hand at this commodity, first learn the ins and outs of investing in gold, including liquidity,  expenses and ease of use.There are many ETFs related to Gold available on Passfolio, for example. 

Another option to consider is purchasing shares from gold mining companies listed on the stock market. 

Investing in Gold on Passfolio

Passfolio’s mobile app and web platform let people in over 170 countries invest in United States stocks, ETFs, and REITs using their local currency and transfer methods. Sign up here

Just access the search tab and search for a company you want to invest in. Then, once you’ve found it, all you have to do is decide how much stock you want to buy. Passfolio lets you choose to either input how many shares you want to purchase or type in how much you want to invest in USD.

You can also search stocks by categories such as Basic Materials, Consumer Defensive, Technology, Financial Services, Healthcare, and many more.